defence

We reported this morning that Tory MPs are trying to make sure that the MoD doesn’t suffer further cuts at this year’s spending review. Mark Pritchard, a Tory backbencher, summed up the feeling of many of his colleagues when he told us:

Colleagues have, to date, reluctantly backed reductions in the MoD budget. However, any additional cuts to the defence, beyond those already agreed, will create a substantial political backlash. In short, the MoD budget has been cut enough, and the Treasury needs to look elsewhere for savings.

Pritchard and his colleagues should be on safe ground: the prime minister himself said that the defence settlement signed in 2010 would require “year-on-year real-terms growth in the defence budget in the years beyond 2015”. Read more

Liam Fox this morning sought to kill off an uncomfortable story by asking his permanent secretary to investigate whether he has breached the ministerial code over his dealings with his friend Adam Werrity.

The defence secretary is under pressure over the fact that Mr Werrity – best man at his wedding – was handing out cards calling himself “adviser” to Mr Fox, arranging meetings and attending sensitive events. Read more

This afternoon’s defence select committee on the strategic defence and security review began on a sour note.

Like an errant schoolboy, or rather the best friend of an errant schoolboy, armed forces minister Nick Harvey was forced by James Arbuthnot, the committee chair, to explain why it was he and not his boss in the hot seat. Read more

Liam Fox’s concerns about setting legal targets for increasing overseas aid spending – which were aired in a leaked letter yesterday – are widely shared on the Conservative benches. Many MPs believe the plan is unaffordable at a time of public spending cuts. And plenty are happy to speak out about their concerns.

Philip Davies, an executive member of the backbench 1922 committee, challenged David Cameron on the issue last week. Davies told us: Read more

Cameron is privately rather relieved he was spared having to take the decision. From his public statements, it seems he backs the principle behind the pact. But in hindsight he thinks Blair gave a bit too much away. Read more

Britain’s defence industry has no better friend than David Cameron, at least when it comes to exports.

Given the dramatic turn of events in the Middle East, the prime minister has certainly not opted for the path of least resistance.

We’re still at the beginning of this trip (as I write this I’m sitting in the Kuwaiti parliament). But it is already absolutely clear that he really does believe in commercial diplomacy – and that means promoting defence sales, come rain or shine. Read more

General Sir David Richards, the chief of defence staff, is travelling with the prime minister in Helmand and certainly gave a much warmer response to the idea of an “accelerated withdrawal” when asked this time round. But there will still be a lively discussion over the pace of the draw down and what, if anything, would slow it down. Read more

For those of you who don’t think it sounds much, a five-year military settlement as generous as that was last granted in the early 1980s.

Is the rise a realistic basis for planning? A prudent approach? Should we really count on a military spending boom after 2015?

This review was, after all, supposed to balance the MoD books. Yet it looks like we’re back to buying kit on the never-never. Officials tell me the cumulative unfunded liability — if you take the usual planning assumption of the budget rising in line with inflation after 2015 — stands at £13bn to £15bn over the coming decade.

Coalition aides say this is completely different from the “black hole” they say they inherited from Labour. It all comes down to this statement given by the prime minister in the Commons:

“My own strong view is that this structure will require year on year real-terms growth in the defence budget in the years beyond 2015.”

On the basis of this “strong view”, Liam Fox’s team think it is realistic and reasonable to at least plan on the basis of real terms increases to cover their spending commitments. Defence chiefs also welcomed Cameron’s “strong view” of the future — but they are still pushing for a more “bankable” pledge. They want George Osborne to guarantee an annual uplift beyond 2015, a request that some Treasury officials will treat as light comedy. I don’t think such a guarantee has ever been given to a department. Read more

The Whitehall battlelines over Afghanistan are coming into focus. General Sir David Richards this morning made absolutely clear he is a commander who is unwilling to be hurried out of Helmand, whatever the prime minister might think.

In his first major interview as chief of defence staff, he rules reducing troop numbers next year and says Britain will stay “as long as it takes”. His words to The Sun leave some room for manoeuvre. (Downing Street are insisting he is “of the same mind” as the prime minister.) But they certainly do not chime with David Cameron’s recent pronouncements. The differences in nuance are obvious.

They give a flavour of a behind-the-scenes debate that will grow in importance. Indeed differences camps almost mirror those in Washington, with Obama and Cameron pitted against the Two Davids (Petraeus and Richards) over the pace and timing of withdrawal.

There is one line in the Richards interview that underlines these emerging alliances. “As long as we continue to put faith in Dave Petraeus and hold our nerve, then I think we can do it,” he says. “It’s definitely winnable.”

The spending review did not end in the way most people expected. When Cameron’s top team gathered around the Chequers table on Sunday to tuck in to roast lamb and Yorkshire puddings, there was virtually no talk of squeezing out extra savings to balance the books. They had money to spare.

This was not the impression given to the rest of the cabinet, or indeed the BBC. But the truth was that the Treasury was sitting on a small cash-pile. After agreeing all the big budgets, there was £1bn or more left in the emergency fund for the quad — Cameron, Clegg, Osborne and Alexander — to distribute.

“They went from the horsemen of the apocalypse to Father Christmas overnight,” said one official close to the final days of the spending negotiation.

This back of the sofa discovery is a feature of spending rounds. The Treasury always set cautious targets so there is some flexibility at the end. But how Cameron handled the mini windfall is revealing. It gives us an insight into both his priorities and the methods he used to bluff the BBC into paying for the World Service. Read more

Has Michael Gove’s discreet approach to budget negotiations paid off? Education bravely resisted the shroud waving that marked the defence review. But it looks like Gove has emerged with a better deal than Fox, at least in terms of his resource budget.

We already know that schools spending — based on the Ed Balls baseline — will rise in real terms (albeit by a tiny amount). Today’s surprise will be that the education department will win the best settlement of all the unprotected departments. That means its resource budget will be cut by less than the 7.5 per cent imposed on defence. When it came to a stand-off between kids and frigates, the kids appear to have prevailed.

Now, as with all settlements announced today, the headline figure mask a great deal of pain. Spending channelled through local authorities (such as children’s services) will suffer. So will spending on 16 to 19 year olds. And of course the resource settlement does not include the education capital budget, which is about to be thumped. Read more

Option: Cut the officer corps of the armed forces by a quarter, returning the ratio of top brass to lower ranks the 1 to 7 level that prevailed through the cold war.

Saving: In salary alone, the saving is around £400m a year. There are then knock on savings from bonuses, housing costs, private school fees, the entourage, the offices, travel costs, training, the pension etc.

The case for a cut: Britain’s armed forces are more top heavy with officers than at any point in the 20th century. As the armed forces have shrunk in size, the lower ranks have suffered more than the officer corps. It now looks terribly unbalanced. The ratio of officers to lower ranks has fallen from 1/10 in the Second World War, to 1/7 in the cold war, to 1/6 through the late 1990s, to 1/5 today. There was no strategic decision to change this structure — it is a symptom of a bureaucracy protecting those at the top at the expense of efficiency. Most striking is the trend since 1997, which is shown in the chart below. Senior officers (colonel and above) have increased by 8 per cent, while the lower ranks have been cut by 12 per cent. What is the rationale for that? There are now more admirals than active warships and two-fifths as many RAF officers of one star and above as there are in the US Air Force, which is roughly eight times the size. Read more

Formally, the shots have yet to be fired in the battle for Whitehall spending cuts, but the Treasury has already set the terms of its looming battle with the Ministry of Defence. A little-noticed but ominous sentence in the new coalition programme has put the armed forces on notice that the axe is about to cut even more deeply than they imagined into the defence budget.

Whitehall insiders are predicting a programme of retrenchment as significant as that marked by the withdrawal “East of Suez” announced by Harold Wilson’s government in 1968. Then, as now, the trigger was a crisis of international confidence in the nation’s finances. Read more

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The fragmentation of UK politics makes the 2015 general election the most unpredictable in living memory. Follow Jim Pickard, Kiran Stacey and the rest of the FT team for unique insights as the campaign gets underway.

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The authors

Jim Pickard is the FT's chief political correspondent, having joined the lobby team in January 2008. He has been at the FT since 1999 as a regional correspondent, assistant UK news editor and property correspondent.

Kiran Stacey is an FT political correspondent, having joined the lobby in 2011. He started at the FT as a graduate trainee in 2008, working on desks including UK companies and US equity markets before taking over the FT's Energy Source blog.